Introducing the Integrated Resource Plan (IRP)
The Integrated Resource Plan (IRP) serves as the government’s strategic framework for planning South Africa’s energy supply. It aims to align future energy demand with available resources and necessary capacity additions. This already-challenging task is further complicated by the transition to a carbon-neutral energy mix (by 2050) alongside the challenges posed by an aging coal fleet, grid capacity constraints, and the intermittency of renewable energy sources.
To address these complexities, the Department of Mineral Resources and Energy (DMRE) has divided the forecasts into two periods: Horizon 1 (2023 to 2030) and Horizon 2 (2030 to 2050). This article concentrates on Horizon 1, as it addresses the most urgent and relevant issues currently faced by South Africa’s energy sector. Our analysis seeks to understand the evolution from the IRP 2019 to the draft IRP 2023 (IRP 2023), comparing its forecasts for 2023 and 2030 against the IRP 2023 baseline and 2030 forecast.
Comparing Apples with Apples
For the sake of clarity and comparison, we have grouped energy categories to account for changes between IRP 2019 and IRP 2023. The tables included in the IRPs can be accesses [HERE], and the grouping used is illustrated in the image below.
One notable disparity is the classification of distributed generation:
- IRP 2019 includes it in the category “Other” along with CoGen, Biomass, and Landfill (CBL). The baseline value for “Other” excludes any existing distributed generation capacity.
- IRP 2023 features a standalone “Distribute Generation” category with no reference to CBL.
In this article, we categorise energy technologies into three distinct usage groups for comparison: the “Baseload” group ensures a steady and reliable power supply; the “Grid-stabilising” group allows the national system to respond to demand fluctuations; and the “Variable” group is marked by their variable output and integration challenges.
Comparison of IRPs for the Year 2023
The figure below compares the energy mix predicted by the IRP 2019 and Draft IRP 2023 for the year 2023, with a breakdown of generation sources grouped by usage. This comparison allows us to judge the accuracy of the IRP 2019 as its 2023 forecast was a 4-year estimate whilst for the IRP 2023 it should be based on actuals.
Key observations include:
- Total Planned Capacity
- Total capacity decreased from 57,583 MW (as projected in IRP 2019 for 2023) to 55,812 MW (actual capacity in IRP 2023).
- Baseload Group
- In IRP 2023, the capacity for “Coal” aligns with IRP 2019 forecasts however the actual energy availability is significantly lower due to a reduced Energy Availability Factor (EAF), dropping from the forecasted 71%-75% in IRP 2019 to 54.72% in IRP 2023’s baseline. This loss of “Baseload” energy has directly contributed to the persistence of load shedding.
- IRP 2019 planned to maintain the baseline “Hydro” capacity of 2 100 MW, yet the IRP 2023 has a baseline capacity of only 1 600 MW, resulting in the overall reduction of the “Baseload” capacity category.
- Grid-stabilising Group
- Overall, there is a minor decrease in capacity for this group, along with the addition of a small amount of BESS that was not forecasted in IRP 2019.
- IRP 2019 planned to increase “Pumped Storage” from 2 912MW in 2019 to 3 425 MW in 2023, yet the IRP2023 has a “Pumped Storage” capacity baseline of only 2 732 MW.
- “Dispatchable” capacity (in MW) met projections. However, its deployment (in kWh) surged due to the underperformance of the coal fleet which led to increased reliance on diesel, further exacerbating Eskom’s financial issues. [1][2]
- Variable Group
- Despite the growth in “Distributed” capacity, which rose from 500 MW in IRP 2019 to 5 000 MW in IRP 2023, there was an overall reduction “Variable” group capacity due to significant decreases in “Wind” and “Solar”.
- The inability to meet these objective figures is understood to be due to grid capacity constraints and the Independent Power Producer (IPP) offices’ failure to achieve the forecasted additional capacities.
In summary, the capacity planned in IRP 2019 for 2023 was mostly attained. The only substantial variance is seen between the planned and actual capacities for “Distributed”, “Solar”, and “Wind”. The actual “Distributed” capacity is higher due to an increase in distributed private sector solar installations. This surge in distributed private sector solar compensated for the failure of the public procurement programs for “Wind” and “Solar”.
Comparison of the IRPs for the Year 2030
Next, we compare the two plans for the year 2030. This analysis sheds light on how the South African Government’s perspective on the country’s energy strategy has evolved.
Key observations include:
- Total Planned Capacity:
- The planned capacity increased from 76 323 MW in IRP 2019 to 84 414 MW in IRP 2023.
- Baseload Group:
- The “Baseload” capacity is higher in IRP 2023 despite a reduction in “Hydro” – the result of excluding the Grand Inga Project’s 2500 MW.
- IRP 2019 had forecast shutting down 11 000 MW of old coal plants and adding 7 232 MW new generation capacity by 2030. IRP 2023 discards the decommissioning plans and proposes completing 1 440 MW of new coal (already under construction) with no additional new “Coal” projects in the plan. This shows a clear intent on maintaining the existing “Coal” capacity.
- Grid-stabalising Group
- While IRP 2023 omits 1 575 MW of “Pumped Storage” capacity planned for 2029 in IRP 2019, the overall “Grid-stabalising” group capacity has increased from 11 830 MW to 19 261 MW.
- There is an addition of 4 000 MW “BESS” and “Dispatchable” capacity nearly doubles to 12 400MW, of which 89% is gas generation capacity.
- Variable Group
- There is a notable decrease in the planned “Variable” capacity for 2030. IRP 2019 planned 31 129MW whereas IRP 2023 only plans 25 713 MW of “Variable” capacity. This 17% decrease is driven by a 29% reduction in “PV” and a 55% reduction in “Wind” capacities and comes despite a 151% increase in “Distributed” capacity.
In summary, the capacities of the “Baseload” and “Grid-stabilising” groups have been increased in IRP 2023, with a focus on maintaining “Coal” capacity, increasing the “Dispatchable” gas-to-power capacity, and adding previously omitted “BESS” capacity. The “Variable” group capacity decreased due to a massive reduction in both the “Solar” and “Wind” capacities, despite a more than doubling of the “Distributed” capacity.
Conclusion
This article analysed the differences between the IRP 2019 and the IRP 2023, comparing the IRP 2019’s forecasts for 2023 and 2030 against the IRP 2023 baseline and 2030 forecast. A brief analysis was provided of the key differences between the two versions and the implications thereof. These are summarised below.
- There is a high degree of consistency between the planned capacities for 2023 in IRP 2019 and the actual capacities for 2023 but primarily due to the surge in “Distributed” generation.
- Public sector procurement initiatives struggled to deliver the capacity additions envisaged under the IRP 2019 with gaps between planned and achieved energy availability (EAF) also having a significant negative impact.
- The private sector’s adoption of solar PV has materially outpaced projections in the IRP 2019; this has played a pivotal role in offsetting some of the challenges faced in adding capacity through other programs.
- Natural gas has emerged in the IRP 2023 as a critical part of South Africa’s future energy mix. Given diminishing gas supply, finding a sustainable solution that addresses both the gas-to-power needs and the wider applications of gas is a critical and urgent priority.
The key takeaway from our review of the IRP 2023 is that there is a critical role for both the private and public sector to play if we are to achieve the energy mix proposed. It will also require very significant investment to build the required capacity in a relatively short timeframe. A stable policy environment which will enable investors to take a long term view, as well as an ability to address some of the immediate bottlenecks (for example in the transmission and distribution infrastructure) will therefore be key.
As an advisor to many of South Africa’s largest energy users, Energy Group has extensive experience helping forward-thinking companies negotiate this rapidly evolving space, please get in touch if a follow-up discussion would be of interest.
